Student Loan Debtors on Strike Against Repaying Debt
Consumers are growing more and more disgruntled about their student loans and the laws that involve them. Originally called the “Corinthian 15,” 15 former students of the now defunct Corinthian College refused to repay their student loans because as they write “we paid dearly for degrees that have led to unemployment or to jobs that don’t pay a living wage.” This letter was sent to the Department of Education that regulates private colleges and student loans.
Now this debt strike has picked up 85 more burdened borrowers who are willing to default their student loans to bring government attention to our nation’s enormous student loan problem. Currently both federal and private student loans are ineligible for bankruptcy. This means no matter what financial hardship a borrower is experiencing, something must be paid back on a student loan.
I don’t forsee a favorable result for the Corinthian 100 arguing for a complete forgiveness of the debt. Billions of dollars in debt would suddenly become at risk if they were successful in avoiding the debt in total. It is a bridge too far in today’s legal, banking, and political environment.
A different strategy would yield better results. For example, private student loan debt can often be settled for an amount that is significantly less than the amount claimed due. A qualified debt settlement attorney can often negotiate with a private lender for a principal balance reduction on the original amount. The Corinthian 100 would be better suited to engage legal counsel to negotiate a settlement on their behalf. Their plight is certainly one of many things a private student loan lender would consider in settling their debt.